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Old 08-17-2011, 09:46 PM   Nav to Top  #1
Vinnystocktips
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Default 3 Long Term Solid Investments

I will be the first to admit that I do not believe in "buy and hold". "Buy and hold" normally translates into let the stocks sit in an account and not look at them. In our dynamic global economy and technology efficiency curve that is very steep; companies can go from top to bottom and vice versa very quickly. This means volatility is higher than ever as leadership can change in sectors over night. Because of this, you can make a lot more money always paying attention to both the macro and microeconomics that occur everyday. This means doing boring things like listening to conference calls and keeping up to speed on all economic data. Yes they are boring, but what makes up for it is making money!

On the other hand, I also do not consider myself anywhere close to a day trader either. Sometimes I might make a trade in a 24-48 hour period if I was trading for an earnings or some kind of short term catalyst; but majority of my holdings cover longer periods of time. However, I do trade around core positions, especially in these volatile times.

Thinking longer term, I feel there are quite a few names that are very cheap right now and are positioned very well for many, many years. It is these types of companies that you can invest in for the longer haul (but do not be scared to trade around a core position). These are usually larger market cap names that are leaders in their industry, have great leadership and usually have amazing balance sheets to continue acquiring.

Google is a name that I feel fits this description. The company has a $172 billion market cap with $30 billion on the balance sheet. Larry Page recently took over at the helm earlier this year and already the direction of the company has changed with it. Google went from padding its bottom line under Schmidt, to Page who believes in growth and aggression. I made these comments after its Q1 release this year when the stock price was hit for 50 points because of Page setting the company up for growth. I told investors to buy at that point and the stock ran 30% up until the last couple of weeks. The company reported 2nd quarter earnings that broke all their records. On top of that the company has bought a couple companies, most recently its biggest purchase ever of Motorola spending 12.5 billion dollars. This combined with Android now gives them a huge connection to dominating a vertical channel of mobile internet search and advertisements. To me this sounds like a bunch of future growth as well as cash flow. So with a 170 billion dollar market cap, how much bigger can they grow? Well to put into perspective, Google can double to be within a few billion dollars of Apple's market cap. If Page is positioning the company to dominate the mobile smartphone market, I could see this happening in a couple years.

Another company that I think fits this model is Oracle. It has a market cap of $140 billion with $28 billion on its balance sheet (with 16 billion in debt though) and has Larry Ellison at the helm which has nativaged the software industry in the last 25 years better than anyone (shorter duration would be Apple at this spot). On top of this great CEO, the company recently stole Mark Hurd from Hewlett Packard after a fidelity issue pushed him out of the company. This combination will increase shareholder wealth over the long haul. What I feel this company is great at which has helped get it to where it is, is being an acquiring company. It has made many acquisitions over the years that have paid great dividends. I feel this company will continue to do just that and continue to grow into new markets. When you are Oracle's size it is cheaper to spend a couple billion on a company instead of laying out the initial outlay of competing against these companies.

The last company that I want to recommend as a safe long term investment is the one in which has the most upside and not in the tech sector. It is the smallest of the group and does not have as solid of a balance sheet. Nor is it a huge company. It only has a market cap of $20 billion so it still could be purchased by someone. The company does have amazing leadership. That leader is Aubrey McClendon, CEO of Chesapeake Energy. The reason I am singling out this company as a safe long term play is it is the leader in onshore natural gas drilling in the United States. The company has the best acreage of anyone and recently announcing what could be a $20 billion find; the Utica Shale in Ohio area. This is below another shale and they think it has oil also. Double word score! Because of this fact alone, the company is positioned for many years of growth and cash flow even with natural gas at these low prices. If natural gas becomes the bridge energy for clean energy, the price of natural gas will double which makes this company worth around $160 billion.

All three of these suggestions in my opinion have minimal risk for the long haul while adding a solid return over the next 5-10 years. Like I said though, do not be scared to trade around a core position in a long term investment if the stock moves in either direction too quickly.

http://www.vinnystocktips.com/2011/0...the-long-haul/

Happy Investing!

Vinny
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Old 08-19-2011, 02:58 AM   Nav to Top  #2
WendyZ
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All 3 good picks Vinny thanks for sharing...

we think alike as I recently bought both Google and Chesapeake Energy.
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Old 08-19-2011, 09:06 PM   Nav to Top  #3
Vinnystocktips
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Always glad to share advice and help guide newer investors. Feel free to sign up to my free email subscription on my site. www.Vinnystocktips.com

GL out there!
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